Executive VP, is bullish about the end result: âOur aim is to provide the best customer service in our industry anywhe
a valuable
Alliance What the Merger of Allied Beverage Group and Breakthru Beverage Means for the state of New Jersey /// Text by kristen bieler /// photograph by Andrew KIst ///
T
he announcement in July that Allied Beverage Group and Breakthru Beverage would be joining forces was remarkable —yet, not remarkable all at once. “Change is not new; consolidation has been the status quo for our industry and our two companies since the very beginning,” describes Jeffrey Altschuler, President/CEO, Allied Beverage Group. “We are both an amalgamation of companies and best practices coming together over the years. We are a melting pot.”
Indeed, Allied and Breakthru both exist as patchwork quilt-collections of many organizations, a result of mergers and acquisitions tracing back to the dawn of time for the wholesale tier: Prohibition’s Repeal in 1933. But it’s the size of this merger that makes it so significant. Among the largest single-state distributor alliances ever— matched in size only by the New York combination of Charmer Industries and Peerless Importers in 2006—the combined organizations will generate annual sales estimated to exceed over $1 billion. Given this scale—not to mention the cultural challenges of bringing two former competitors under a single roof—the biggest surprise so far has been just how un-rocky the start of the new venture has been.
14 New jersey beverage Journal October 2017
Clockwise from top left: Jon Maslin, Corey Bronstein, Bobby Harmelin and Jeff Altschuler
■ A Vision Realized “It all began with a vision of what was possible,” says Altschuler. “I had lunch with Charmer Sunbelt’s Charlie Merinoff years ago and it seemed like a great idea, but the timing wasn’t right. It wasn’t until recently, despite rumors to the contrary, that it all came together. The industry has changed so much, and of course back then, Breakthru Beverage [the combination of Charmer Sunbelt Group and Wirtz Beverage Group] didn’t exist. Negotiations are never fun; this is the fun part— getting to build a company. This is what we’ve been looking forward to.” The “New Allied,” as it’s being referred to internally since the deal closed on September 1st (the Breakthru name is going
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away), will be transformed in the coming years. While the details of what exactly the company will look like are still very much in the incubation phase, Robert “Bobby” Harmelin, Executive VP, is bullish about the end result: “Our aim is to provide the best customer service in our industry anywhere. With the new technology we’re developing, our ability to deliver timely and accurately will be unsurpassed.” Ultimately, Allied plans to consolidate into a single, stateof-the-art facility in the northern part of the state, with a smaller warehouse in the south—both outfitted with the most cutting-edge equipment available. Harmelin reports that New Jersey retailers were initially excited simply for the convenience of having one less delivery truck. But he promises the benefits to Allied’s customers will be far greater.
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Suppliers already see the upside—and not just those suppliers who gained exclusive distribution through this alliance. “Suppliers wanted this consolidation; they value a distributor with more capabilities to provide resources and focus for their brands,” says Altschuler. “Almost across the board, our large and small suppliers believe this is a real positive for New Jersey and our two companies.” “Most of our suppliers recognize that bringing these companies together will put them on a bigger, better platform,” says Jon Maslin, former President of Breakthru Beverage New Jersey, and now part of Allied’s executive leadership team that will spearhead the integration. “A few of the small wineries were worried they might get lost, but I explained our plans to create an organization that will bring focus to boutique producers; they will have more
October 2017 New jersey beverage Journal 15
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Alliance
focus than they do today. With our restructure, we’re creating a model that benefits not just the top-selling SKUs, but activates well into the depth of the portfolio—to create a pull model, and not just push.”
“suppliers wanted this consolidation; they value a distributor with more capabilities to provide resources and focus for their brands.”
■ A Well-Matched Fit “Our two companies really complement one another,” says Maslin. “We have a stellar wine portfolio and a strong onpremise culture and focus. Allied has a bigger platform, a terrific system of marketing brands off-premise, and an unmatched exclusive spirits portfolio. And they have some impressive exclusive wine brands as well.” The synergies go deeper: The best practices mash-up currently underway will make for a smarter, savvier organization. “Breakthru has proven to be extremely creative, and while we aren’t part of Breakthru’s national platform, we will benefit from their national insights and trend-spotting,” says Altschuler. “Breakthru operates at the highest level and have advanced in a lot of areas that we expect to learn from,” says Corey Bronstein, Senior VP and General Manager. He cites their strong IT platform, as well as their work in direct-to-consumer marketing— driving traffic to sampling events, for example. “Their social media platform and the stage they will put us on is definitely going to help our suppliers and customers. Because Breakthru had far less exclusives in the market than Allied previously, they have become very adept in figuring out how to gain customer advantage.” Maslin sees his people as his greatest asset: “Breakthru has a phenomenal team,” says Maslin. “We’ve been operating with a limited exclusive spirits portfolio, a smaller
— jeff altschuler
size, and an antiquated building structure, yet we remained very competitive in the marketplace; it’s a testament to the skill level of our team.” Allied brings not just their high-quality portfolio of exclusive spirits and wines, but a supplier sensibility honed over the years. “Our ownership has always valued hiring people with extensive supplier experience, including international experience,” says Bronstein, who spent 19 years with Seagram and Diageo before joining Allied 13 years ago. “Most of my staff is ex-supplier, which makes it so much easier to speak their language.” Few distributors are as progressive as Allied when it comes to embracing women. “You would be hard-pressed nationwide to find more female brand managers working at one distributor than we have working today at Allied,” boasts Bronstein, who also takes pride in building a more emotionally intelligent working environment. The company recently hired specialists to conduct personality assessments of all employees. “We’re hiring more intelligently, accessing the best parts of our employees and marching more closely together as a team,” says Bronstein. “It’s been one of the most productive things we’ve done.”
It’s also made them better partners: “The level of cooperation and collaboration from the Allied team has been so impressive,” says Maslin. “Everyone checks their ego at the door and wants to figure out how to make this work.”
■ Road-Mapping a Restructure The question of the hour within the trade has been: How will the company go-tomarket and what will their selling divisions look like once the integration is fully complete? Since roughly 60% of Allied’s sales happen between September and December, Bronstein affirms that there will be no critical changes in the near future— the sales forces will run parallel through the end of the year. But there is clearly an expectation that a new game plan will be unveiled at some point in the first quarter of 2018. “We are doing an exhaustive amount of research to determine the best way to go to market,” says Altschuler. Together, the companies have approximately 350 salespeople and 100 managers, but don’t expect downsizing, he says: “Our goal is not to cut our sales force—we will redeploy in some cases, and in other places, strengthen
“New Jersey is becoming a much more sophisticated, demanding market and we believe we’re in a real position to take advantage of that.” — Bobby Harmelin
Allied Beverage Group’s roots can be traced back to the end of Prohibition
1933
Galsworthy, Inc., predecessor company to Reitman Industries, is formed (the first wholesale license in NJ).
1933
F&A Distributing Co., J&J Distributing Co., Joseph H. Reinfeld Distributors and predecessor company to Royal Distributors are formed.
1951
Merchants Wine & Liquor is formed.
1960’s/1970’s
The aforementioned companies make many intervening acquisitions of regional distributors. Dorchester is formed (1960). Gillhaus Beverage is purchased by F&A Distributing (1964).
1980’s/1990’s
J&J Distributing and Dorchester combine to form Jaydor Corporation (1980). Royal Distributors acquires smaller, regional distributors including Central, Dealers Liquor Co., Gold Star and Joseph G. Smith & Sons.
numbers. We want to reassure customers that the people calling on them will continue to call on them.” And while Breakthru’s name might be gone in New Jersey, Altschuler is aware that greater association and significance lies with the legacy company’s well-known selling divisions, some of which go back many decades. These will be respected, he assures.
“correct segmentation and organizational design are incredibly important to us. having multiple sales forces will be one of our great strengths.” — corey bronstein
With size comes power and leverage, of course: The company now represents most major spirit brands in the state, a pie which was once divided three ways. But it also brings challenges: How can one company service so many brands and customers? “Correct segmentation,” answers Bronstein. “Organizational design is incredibly important to us. Having multiple sales forces will be one of our great strengths; retailers want a reason to see a salesperson and our professionals need to understand why they are calling on an account. We want to have appropriate divisions to handle boutique brands.” It’s a fine balance, which the company is keenly aware of, adds Harmelin. “There is no way our customers are going to want to see seven different selling divisions knocking on their door.”
1994
Reitman Industries and Royal Distributors merge to form R&R Marketing, LLC.
1995
Merchants Wine & Liquor and Gillhaus Beverage consolidate into F&A Distributing Co.
1996
The emphasized focus on sales can obscure what is actually going on behind the scenes, reminds Bronstein: “A distributor is a business-to-business practice. Before this combination, Allied already had 8,000 customers and 400,000 invoices per year. Getting product to market requires an extraordinary amount of work from finance, credit, warehouse, delivery, HR and logistics—particularly during this integration. While the general trade tends not to focus on back-of-the-house needs, we know our customers will benefit tremendously from the integration of these teams.”
To anyone anxious about the merger, Altschuler likes to share long-range perspective. “We’ve been through this before, most recently in 1996 and 2000, but really since the beginning.” (Breakthru’s original company began in 1933 and held the first wholesale license in New Jersey. See timeline below.) Altschuler sees tremendous advantage in cultures coming together: “We’re not inbred, which is great. We’re able to constantly remake ourselves, move people around and bring in new people from the outside.” Change is seen as lifeblood in the Allied world view. “If you’re not comfortable with change, you won’t flourish here,” says Bronstein. “In spite of this company’s long heritage, we are very accepting of new ideas and constantly make a point to ask what the opposite view might be.” It’s this open-mindedness which has put the legacy Breakthru team at ease. “Most of the anxiety about the merger has diminished as we began working together,” says Maslin. “We see that this is a partner-
2000
Jaydor Corporation joins Allied Beverage Group.
— jon maslin
ship—bringing two companies together— not one gobbling up the other.”
■ The Market Demands It
■ Strength Through Constant Evolution
F&A Distributing Co. and The Baxter Group (successor company to Joseph H. Reinfeld) merge to form Allied Beverage Group.
“with our restructure, we’re creating a model that benefits not just the top-selling SKUs, but activates well into the depth of the portfolio.”
2004
In New Jersey—the most ethnically diverse state in the country—business is good these days. Premium and superpremium sales are up—particularly in the tequila and whisky categories—and the hottest wine segment is the $11 to $17 range, with rosé leading the charge. All indicators point to a trade and consumer population that feels very confident about the future of beverage alcohol. Yet, it’s also never been more competitive. “Suppliers are pushing distributors in the area of ecommerce and retailers are increasingly accessing our website,” says Harmelin. “New Jersey is becoming a much more sophisticated, demanding market and we believe we’re in a real position to take advantage of that.” In a rapidly consolidating industry, Altschuler feels the ability to adapt and evolve has never been more vital: “We really do embrace change. And I believe it’s this philosophy that will propel our very skilled and professional team to create superior value for our suppliers and customers.” n
Charmer Sunbelt Group forms partnership with R&R Marketing.
2015
Charmer Sunbelt Group and Wirtz Beverage Group merge and R&R Marketing becomes Breakthru Beverage NJ.
2017
Allied Beverage Group merges with Breakthru Beverage NJ. The combined company will operate as Allied Beverage Group.
